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- Energy Issues
By: Wayne Brown
The President continues to skip out of Washington at the height of budget discussions to chase after his campaign ambitions. Recently, he ran off to a windmill farm like some kind of real life Don Quixote. He listened to reporters complain about the high costs of fuel only to laugh and tell some of them that maybe they needed to trade-in their vehicle for something that is more economical. Then he laughed as if that were the only real consideration in the matter. Personally, I was offended.
I drive what the President in his pandering to the tree-huggers would describe as a “gas guzzler”. It is an older model GMC Suburban which I dearly love and have since the day I bought it. It is a great road vehicle just right for family travels and for hauling a wife around who carries most of the inventory of a day spa and hair salon with her on trips. Add in the dogs and you got yourself a boatload of stuff moving across America.
I drive about 10,000 miles per year. About 60% of that driving is going to grandma’s house, etc. so they miles are logged at cruising interstate posted speeds. At those speeds, my Suburban gets about 15 miles per gallon. Now, on the remaining 4,000 annual miles, I am here in the DFW Metroplex doing your typical stop and go nuthouse driving. In that environment, the Suburban delivers around 12 miles per gallon. So, over the course of the year, if the price of fuel were to reach $5.00 per gallon, I would spend $3,665 dollars to fuel the Suburban for those miles.
Oh, please note that the Suburban is paid for and has been for some time. It is also quite reliable and breaks down very little. My mechanic says it will probably run for 200,000 plus reliable miles if I continue to take care of it. So, other than insurance and licensing, which is low because I have an older vehicle, my primary costs is fuel and oil/filter changes. Oil and filter is required by all vehicles so that expense is a wash and we are basically back to fuel consumption.
The President would say that “I need a trade-in”. Well, in the interest of political harmony, I thought that I would run a virtual scenario in which I trade away my Suburban and acquire myself a vehicle more in line with the President’s approval in terms of energy consumption. I thought this would be a good exercise so that I could demonstrate what utter stupidity does to people when they listen to others and don’t think for themselves. Keep in mind, gasoline is not yet at $5.00 per gallon but I wanted to load this scenario up for the President’s side of the formula to the greatest extent that I could.
In my household, as in small business America, “cash-flow” is KING. We strive to always have “positive” cash flow in our household business model. When we do not, we change things so that we are not accumulating debt as our federal government continues to do on a daily basis unchecked. So, when we consider things like changing vehicles, the impact on cash flow is always important. Keep in mind that the Suburban is paid for and I make no monthly payments to anyone…it’s mine, it starts, it runs, it looks good, and it’s reliable.
In the interest of economizing, I thought that I would look for a vehicle in the “used market” so that I could avoid that rapid drop in depreciation that occurs shortly after you drive that new car off the lot. I also wanted a vehicle that had a proven track record for reliability and one that offered a reasonable level of comfort along with excellent fuel economy. Lo and behold, I located that vehicle at my local CarMax lot. It was a 2009 Toyota Camry Hybrid….Woo! Green Technology! Certainly Toyota is known for their longevity and reliability. The Camry is a comfortable vehicle and the fuel numbers at 33 city and 34 highway are just supreme. Heck, this is not as hard as I thought. The price…why only $22,998 no haggle dollars and you drive it home. What could be better?
Okay, by the time you figure my trade-in value, add back the sales taxes and licensing and then top things off with a 100K drive-train warranty at an added $2500, I figure I am in this Camry for about $450 a month for the next 60 months. But wait, maybe you shouldn’t buy that warranty. Oh, I have to…these hybrids are quite complex with their battery charger interconnects to a gasoline driven drive-train…what if it breaks…well, that’s just too much risk…I must have the warranty for peace of mind.
Okay, the Suburban is gone just as the President would wish it. My shiny, new, used Toyota Camry Hybrid is sitting in the driveway at my house. I have a payment book from the finance company letting me know that my household cash flow will have to come up with that $450 payment each month for the next 60 months or they will come and get my little car. That’s okay; I’ll simply pay for my new, shiny, used car with the fuel money the President so intelligently pointed out that I could save. Let’s make the calculation!
Remember what I said about my driving habits…the 10K miles a year, 60% highway, 40% city. Remember my gas mileage averages on the Suburban and remember that I calculated that at $5.00 per gallon I would spend an annual amount of $3,665 dollars to fuel the Burb? You remember all of that, right? Well, good, let’s do some calculations on the Camry and see how much money I will save with my Hybrid.
By the way, I am not changing my driving habits so we can still calculate things based on the same model. But….the fuel economy numbers are so drastically higher that I am about to pee my pants just thinking about how much I will save. Let’s get cracking on those numbers now!
So, my Toyota will cover that 6,000 miles of highway driving I do at a hefty 34 miles per gallon yielding (in round numbers) 177 gallons of fuel burned in the process. The remaining 4,000 city miles will be covered at a smoking 33 miles per gallon due to our ability to run on electricity for a portion of that distance and yield an annual fuel consumption of 121 gallons of gasoline. In total, my Toyota will burn 298 gallons of fuel to cover the 10,000 miles. Now, at $5.00 per gallon, that is an annual cost to me of $1,490 dollars…certainly much less that I was spending to fuel that Burb.
Remember, my household cash flow is now loaded with a new demand of $450 per month for this car. But already I have seen that if I take my total cost of fuel for the Burb and subtract the cost of fuel for the Camry, I have saved a whooping $2,175 dollars for the year or divided equally over that year, I just got back $181.25 of my $450 monthly payment. Woo HOo! Wait a second? Is that right? Only $181 dollars? But the President said that I needed…Now I’ve got to…What a load of crap!
Even with the fuel savings calculated at $5.00 per gallon and all the economy of my Toyota Hybrid running at nearly three times the fuel economy of my old Burb, I am still going to have to shell out over $268 per month out of my household revenue to cover the cost of owning the Toyota. I really should have given this more thought but the President said that I needed to change my vehicle if I wanted to save money. Now, I am spending the money that I once saved to make the payments on my Toyota and I wish I had my Burb back!
The truth of the matter, folks is far from where we stand today. In fact, for me to reach a break even point on this car trade, the price of gasoline would have to more than double its current market price. Now, for some of you, you look at this calculation and say, “well I didn’t learn anything…I knew that!” But let me assure you that for every person out there who “knows that” there are 10 others who would be shocked to find it out because they don’t think for themselves. They listen to a President who they happen to worship say “go trade cars” and they head down to the local dealer and do something really stupid that makes their life worse. Unfortunately, as the comedian, Ron White, so astutely points out, “You can’t fix stupid.”
I took you on this exercise to make a point. Our problem with the high cost of crude oil in this country is driven by a number of factors including market demand, market consumption, and availability. At present, the global demand for crude oil is high and will likely stay that way as long as countries as large as China are in their emerging stages. Even if China is not using a lot of crude, it makes for a good story and a good basis for raising the price on folks that have no other alternative. Consumption is growing in some areas and maybe dropping in others. It is said to be dropping now in the USA but gasoline prices continue to climb…yet another indication that the story may be flawed. Finally, availability becomes an issue as well. At the present, we are super dependent on foreign oil supplies. This is not only expensive for the consumer at the pumps; it is a threat to our national security. That singular fact should be enough to turn the heads of all our elected officials and make them check their six.
Instead, we continue to rely on foreign oil and suffer the effects of market pricing. We continue to forbid the drilling of our own resources on domestic grounds for purely “environmental reasons.” We continue to put our national security at a lower priority than the dangers associated with having some type of environmental issue during the process of drilling. Could there be stronger evidence that you really cannot fix stupid?
You can listen to all the smoke and mirrors of politicians all day long and not learn a damn thing other than how to lie on a highly intellectual level. The government sits idly by and restricts domestic drilling while watching the consumer pinched by the costs of gasoline. Soon, that pinch will be seen on the grocery store and retail shelves as the price of transporting goods skyrockets and runaway inflation ensues. Still, the government will not relax its choke hold on the resources of American crude oil deposits because it has a different agenda and it intends to carry it out.
Here in the DFW Metroplex, we have a problem or at the very least, we are told that it is a problem. We have some brown scud that hangs over the area on given days that is said to be the visual residue of exhaust emissions given off by vehicles transiting the city. Now, Texans like their cars and they like ‘em big. They also like the freedom of having their car available so mass transit has not caught on as well as one might imagine no matter how many tax dollars the U.S. government dumps into the formula to create it. So, if the consumer will not cooperate, we’ll put him in a position in which he or she has no alternative. That’s correct. The government will make sure the price of gasoline is so high that mass transportation will be the only viable way to move about. We will choke the American automobile off the streets of America. This is not only true in the DFW area but in many areas across America.
In the mind of the U.S. Government and its almighty step-child, the EPA, America must be made to conform to the environmental standards laid down for clean air all across America. If this means taking away your personal freedoms, then so be it for the good of us all. It starts with offers of mass transit. It continues to be pressured by higher and higher fuel prices and taxes on those fuels, and in the end, when only the rich can afford it; it will be capped with a supreme luxury tax as justification for such extravagance. This is the road we are on. Obama’s not driving this boat; Bush wasn’t driving this boat. It is bigger than the President, bigger than Congress, bigger than the Supreme Court. It is the unwritten law of the land and it eventually will erode the individual rights one by one of every citizen in this country to a level at which the government will dictate how, where, and when you go and come in your personal life. That’s where we are headed.
Now, that might seem a bit far fetched to some of you as you quickly write me off as a nut. For others of you, I see you nodding your head and agreeing “yes, yes, we must do this so mankind no longer harms the precious environment with his rampant use of fossil fuels.” You actually believe that mankind is so absolutely, overpoweringly, so strong and capable that it can destroy Mother Nature’s ability. Well, just stand right here for the band wagon will be by to pick you up at any minute and take you to the big parade with others who feel the same way. I, for one, won’t be going.
If you walk away from this discussion with nothing more than the idea that you have to be very careful about trading cars, then I have accomplished something with my writing. If you walk away thinking that the rest of what I have said here is simple conjecture and has nothing to do with the future of America, all I can say is God Bless Ya…and I hope the shock is not too much for you when the reality becomes apparent.
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